Risk management: Review your contracts

Q. What should I consider before signing a lengthy contract with a referral source?

A. When it comes to contracts and contractual liability, things get complicated quickly. Here are some elements to understand when reviewing a contract from a referral source (or payer, or any other organization).

First things first—read the contract. If you have an attorney, it's worth having them take a look so you fully understand your liability.

As you work your way through the contract, you may come across a few terms that you have never heard of. A few to look out for are:

Additional insured

This is a third party added on to your insurance as another insured. Check the contract to see who you're expected to add.

Waiver of subrogation

This is an agreement in which two parties agree to waive subrogation rights against one another in the event of a loss (when an insurer seeks reimbursement for losses from the at-fault party on your behalf).

Primary/noncontributory

This refers to the order in which multiple policies respond to a loss (e.g., your policy might be required to pay before other applicable policies and not seek any contributions from those policies).

Next, check the coverage limits the contract requires and compare them to your own. Your insurance provider can help you do this and adjust your policy (and premiums) if your limits don't meet the requirements.

Finally, you'll be able to consider your cost and exposure. How much revenue will you bring in? How much will your premiums increase? And, how much risk do you assume for the work? Is the revenue worth the risk?

Contractual liability is complex. Just remember—review the contract with your insurance provider and your legal counsel. They'll be able to walk you through the steps you can take to make sure you're covered.

Adam Miller is a senior HME program manager for VGM Insurance. Reach him at adam.miller@vgm.com or on LinkedIn.